How to put sl and tp in forex?

Forex trading involves a lot of decision-making, and one of the most important decisions you will make is when to enter and exit a trade. To do this, you need to know how to set stop loss (SL) and take profit (TP) orders. A stop loss order is a preset order that automatically closes a trade when the market reaches a certain price, while a take profit order is a preset order that automatically closes a trade when it reaches a certain profit level. In this article, we will discuss how to put SL and TP in forex.

What is a Stop Loss Order (SL)?

A stop loss order is an order placed with a broker to sell a currency pair when it reaches a certain price. The main purpose of a stop-loss order is to limit traders’ losses in case the trade goes against them. This order is essential in forex trading since it helps traders to minimize their losses and protect their capital.

When you place a stop loss order, you specify the price at which you want the trade to be closed. For instance, if you enter a long position on the EUR/USD pair at 1.2000 and you set a stop loss at 1.1950, your trade will be closed automatically if the price falls to 1.1950. This helps to limit your losses in case the market moves against your trade.

Types of Stop Loss Orders

There are different types of stop loss orders that traders can use in forex trading. These include:

1. Fixed Stop Loss Orders: This is the most common type of stop loss order. It is set at a fixed price level, and it remains in place until the trade is closed or the stop loss is adjusted. Fixed stop loss orders are usually set at a certain percentage of the account balance or a specific number of pips.

2. Trailing Stop Loss Orders: A trailing stop loss order is a dynamic stop loss order that follows the trade as it moves in the trader’s favor. This type of stop loss order is set at a certain number of pips from the current market price. If the market moves in the trader’s favor, the trailing stop loss order will move up, protecting the trader’s profits. If the market moves against the trader, the trailing stop loss order will remain in place until the trade is closed.

3. Guaranteed Stop Loss Orders: A guaranteed stop loss order is an order that ensures that the trade will be closed at the specified price level, even if the market moves against the trader. This type of stop loss order is only offered by a few forex brokers, and it usually comes at a premium cost.

What is a Take Profit Order (TP)?

A take profit order is an order placed with a broker to close a trade when it reaches a certain profit level. The main purpose of a take profit order is to lock in profits and prevent traders from giving back their gains. This order is equally important as the stop loss order since it helps traders to capitalize on their profits.

When you place a take profit order, you specify the price at which you want the trade to be closed. For instance, if you enter a long position on the EUR/USD pair at 1.2000 and you set a take profit at 1.2050, your trade will be closed automatically if the price reaches 1.2050. This helps to lock in your profits and prevent you from giving back your gains.

Types of Take Profit Orders

There are different types of take profit orders that traders can use in forex trading. These include:

1. Fixed Take Profit Orders: This is the most common type of take profit order. It is set at a fixed price level, and it remains in place until the trade is closed or the take profit level is adjusted. Fixed take profit orders are usually set at a certain percentage of the account balance or a specific number of pips.

2. Trailing Take Profit Orders: A trailing take profit order is a dynamic take profit order that follows the trade as it moves in the trader’s favor. This type of take profit order is set at a certain number of pips from the current market price. If the market moves in the trader’s favor, the trailing take profit order will move up, locking in the trader’s profits. If the market moves against the trader, the trailing take profit order will remain in place until the trade is closed.

3. Multiple Take Profit Orders: A multiple take profit order is an order that allows traders to take profits at different price levels. For instance, if a trader enters a long position on the EUR/USD pair at 1.2000, he can set multiple take profit orders at different price levels, such as 1.2050, 1.2100, and 1.2150. This allows the trader to take profits at different levels and maximize his gains.

Conclusion

Setting stop loss and take profit orders is an essential aspect of forex trading. These orders help traders to minimize their losses and maximize their gains. When setting stop loss and take profit orders, traders should consider their risk tolerance, trading strategy, and market volatility. By using the different types of stop loss and take profit orders, traders can protect their capital and capitalize on their profits.